Sunday, November 27, 2011

There has been a lot of clamour
about high petrol prices, and rightly too. Of the Rs.70-odd per litre that
petrol is retailed at, only Rs.35-40 would be the true ‘economic price’ of
petrol (including a ‘normal’ level of profit and ‘normal’ taxes) and another
Rs.35-odd are taxes.This is nothing but
government loot, no other commodity is taxed as much, except liquor and
cigarettes where ethical reasons may justify exorbitant taxes.

Drilling for oil in the deep sea

At these levels of Rs.40 (or even
Rs.70) per litre, is petrol really that expensive? Consider the economics. Drilling
for oil is a difficult business. Oil is formed in the belly of the earth by a
gradual process of degradation of fossils over millions of years of earth’s
formation. To get it to ground, you hire a team of highly educated geologists,
purchase sophisticated satellite imagery, and identify potential areas where
oil could be found. Inevitably, most of such areas happen to be inhospitable,
such as barren deserts or at the bottom of the ocean. You need expensive
drilling equipment that reaches the core of the earth. Of the many wells that
one drills, only a few yield oil in quantities large enough for commercial
exploitation. The whole process, from prospecting for oil till the first drop
is sold may take anywhere upto 10 years. The company employs highly paid
consultants, engineers and project managers who work for years together to make
the project a success. The exploration company ends up spending tens of billions
of dollars, over several years before its first revenue is earned.

World's largest refining complex is at Jamnagar

Crude oil that comes out of the
ground needs to be refined before it can be used. Refining is also a highly
complex engineering operation, requires another several billions of dollars of
investment, and sophisticated engineering and management skills. Building a
refinery takes as much as 3 to 5 years.

Refined petrol, one of the many
outputs of the refinery, is now ready to fill your fuel tank, but it is yet to
reach the consuming markets. Large and small petrol pumps, located in the nook
and corner of the country need more money to build than say, a warehouse
storing rice or timber or any other commodity. And when it enters your fuel
tank, the fuel is burnt within days and is lost forever!

Throughout this process, huge
amounts of time and money are also spent in transporting the commodity. World’s
major oil exploration centres are in the barren deserts of Arabia,
the deep sea in the Gulf of Mexico and Brazil,
or in Siberia in Russia.
Major refineries are located thousands of miles away, such as in India,
China and the Far
East. Consuming centres are in Europe and
the US. At each
stage, oil is transported through massive tankers which themselves run on oil,
or by pipelines, which take several years to build and cost several billion
dollars. There are pipelines which run across the entire length of Russia,
from Siberia in the East to the developed markets of Europe.
Giant ships circumnavigate half the globe from Reliance’s giant Jamnagar
refinery to the United States
and elsewhere.

I have written all this in some
detail to give you an idea of what a drop of petrol goes through, before it
enters your fuel tank.

Compare this business to that of
making any other household product such as a shampoo, detergent, fruit juice or
ketchup. These products can be manufactured in any tin-roof shed just across the
lane with a handful of uneducated labourers, and sold in a matter of a few days
to recover the costs and make a profit.

Friday, November 18, 2011

Vinod Kambli has claimed that India's 1996 World Cup Semi-final with Sri Lanka might have been fixed, and Azharuddin is at the forefront in rubbishing his claims. One does not know about this specific match, but existence of match fixing and the association of the underworld with cricketers, especially in the 90s is well known. Dawood Ibrahim was a regular at cricket matches in Dubai. Sharad Shetty, D-company’s financial advisor was his key link with international cricket betting syndicates, and advised Dawood on cricket betting. Ashraf Patel, businessman and a close friend of Azharuddin was shot dead by Chhota Rajan’s men in April 2000 for his alleged links with Dawood Ibrahim’s gang. To read a very interesting report on the subject, click here.

It was also believed at that time that Patel's murder was related to the sensational match fixing allegations made by South Africa’s Hansie Cronje, against which the Delhi Police had registered a case. Azharuddin was questioned by the Mumbai Police after Patel’s murder.

The CBI investigated the match fixing allegations. The full text of the CBI report on match fixing and betting syndicates is available here, but I quote from one of the paragraphs:

“……….Azharuddin was paid a sum of Rs 50 lakhs as an advance with the arrangement that the initial amount would be adjusted against the matches he would 'do' for MK. Azharuddin promised MK that he would provide the exact information as to when India would win or lose. He does not remember the exact number of matches which Azhar 'did' for him during this period………….”

Saturday, November 12, 2011

Went for Tintin movie today. As a child, I was a voracious
reader, and read a whole lot of books, on a wide range oftopics. Without doubt, Tintin comics was one
of my favourites. The Tintin series had everything one would wish for – comedy, adventure and originality. So yesterday, when I heard that a
movie has been released on the Tintin series and that too, from Steven
Spielberg, in 3-D, it was too much to resist.

Admittedly, the Secret of the Unicorn is not the best of
Tintin's stories. There have been others that I have liked more. In fact, this movie is a mix of three of his titles. The director’s choice may have been
dictated by the need to show a lot more action, than what a Tintin story
normally has. Whatever the reason, the movie is worth a watch for its
outstanding animation and the sheer memories that it will bring back to you –
Snowy, Captain Haddock and of course, Thomson & Thompson!